Chinese steelmakers’ business expectations reached a minimum in June

No expectations for significant improvements in July too

In June, China’s steel industry business expectations index fell 4.6 percentage points from the previous month, to 36.2 points. This is the lowest level since this index has been calculated (November 2018). The survey of experts was conducted at the beginning of the second half of June, when the Chinese market was in decline, the statement on the website of China Federation of Logistics and Procurement reads.

The sub-index, which reflects new orders from domestic consumers and exports, fell to a record low of 25.9 in June, from 32.1 in May. The manufacturing sub-index decreased by 8.6 points, to 34.1. Another sub-index characterizing the expected level of production and operating activity decreased by 2.2 percentage points, to 45.2 points, the lowest level since the beginning of 2022.

“According to the changes in the sub-indices, the impact of the pandemic is still remaining and demand has declined, leading to an overall decline in steel prices and a reduction in steel mill production. Overall market demand is expected to remain weak in July, steel mill production will remain low, and steel and raw material prices will fluctuate at low levels.

According to CSLPC, demand in the steel market may remain weak in July. First, July is the traditional off-season for the steel industry, hot and rainy weather is not favorable to construction, which constrains demand in the steel market. Second, logistical difficulties caused by the pandemic may remain, and it will have some impact on the demand recovery.

Earlier GMK Center reported that in May the index of business expectations in the steel industry in China rose by 0.4 percentage points, compared to April, to 40.9%. In May, China’s steel production index stood at 42.7%, up 4.1 percentage points from April as the COVID-19 pandemic eased. The new orders index amounted to 32.4%, which is 1.2 percentage points lower than in April.